Saving Money

Years ago when I graduated high school and started to earn a substantial income I had no concept of savings. I spent money as I earned it and lived paycheck to paycheck. It wasn’t until I read Dave Ramsey’s book Total Money Makeover that I learned my mentality on money was foolish. I was only 21 years old and had drowned myself in credit card debt and a terrible credit score to boot. I felt overwhelmed, like I had dug my own financial grave. It’s scary to feel as if you have no control and can’t get ahead. It is these obstacles that help us grow though. I knew I had to come up with a solution and Dave Ramsey’s book proved to be the key to my salvation.

Dave Ramsey has seven baby steps to financial freedom in his book and the first and most important in my opinion is to start building an emergency fund. The amount you should shoot for is dependent on your personal expenses but he recommends at least $1000. I found this goal to be fairly easy to reach in a short period of time and it has proven to be a good amount for my circumstances. Once you have that money saved away your emergencies won’t feel like emergencies. They will merely feel like a small bump in the road.

Why is it important?

For starters, if you get fired or “let go” you’re screwed without it. You can always resort to charging up all your credit cards, but that’s just going to get you into a sea of financial trouble. Don’t be a dummy.

You get socked in the face at a bar. Insurance only goes so far, beyond that you’re going to need to cough up some money to cover the extra expense to get your teeth fixed.

Your tire blows going down the highway. These things happen more often than we’d like them to.

For the average person with no money in savings these scenarios would cause anyone to go into a huge panic. With a savings account built up these all become inconveniences. Savings give you peace of mind and financial security. $1000 may not be enough to live off of if you lose your job but it will give you some time to come up with a solution. If you feel more comfortable having more than aim for a higher goal. Even if you feel that you are currently living paycheck to paycheck, you can find ways to cut out non-essentials to slowly grow your savings account. If an emergency comes up, think carefully about the situation and be sure it is actually an emergency before you spend money out of your savings to fix it.

Thanks to the inspiration of The Budget Mama I have decided to take an oath to not spend outside of a strict budget for the whole month of March. The way a no spend challenge works is you don’t spend any money on anything that is a non-essential. You still pay your bills, still buy groceries, you just go a month without all of the luxuries and extras. My weekly budget will consist of an allotted $40 for gas and $20 fun money. In future challenges I will probably try to cut out the fun money but I don’t want to go crazy without my occassional McDonald’s tea and I don’t want to set myself up for failure so I’m allowing myself that much for now.

At the start of the week I will go and withdraw $60 cash and divide it into two appropriately labeled envelopes. One for gas and one for fun. Then throughout the week I will be able to see what I have spent and what I have left. Any money that I have left at the end of the week will be deposited into the next weeks fun money as a reward for staying within budget.

Some of the changes I will be implementing to hopefully help me not completely fail at this will be:

Sending any promotional emails straight to my spam folder without looking at them (especially Ulta, damn you great sales!)

Avoid the mall at lunch. I tend to do the most shopping when I’m at lunch so i’ll either use that time to workout or read instead. Good thing I have lots of books waiting for me!

Avoid browsing any online stores including Groupon.

Use freebies. A big expenditure of mine tends to be makeup and skin products but I have a ton of freebies I’ve never used. It’s about that time.

Automatic draft to savings. I will be having the bank automatically draw the additional savings out of my account for the two paychecks I’ll receive this month and just allow enough extra available for keep my balance where it needs to be maintained.

Lots of time at home! I actually have a pretty full schedule this month filled with free activities so it shouldn’t be too hard. Plenty of mountain biking, working out and school to fill my time.

Leave my debit card at home. No better way to not spend anything

My main goal with this challenge is of course to save money but beyond that I would like to see a positive change in my spending habits.

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